Mette Frederiksen

Geopolitics and supply shifts drive sustained VLCC demand from Brazil to China

The combination of rising Brazilian crude supply, shifting geopolitical dynamics, and price-sensitive Chinese refinery demand has led to a significant increase in VLCC shipments from Brazil to China in recent months.

Several new FPSOs (Floating Production Storage and Offloading units) came online at the end of 2024, enabling Brazil to steadily ramp up its crude oil production and exports in early 2025. According to data from Vortexa, Brazilian crude exports rebounded sharply in March to nearly 2 million barrels per day (mbd), after hitting a seasonal low of just 1.3 mbd in January.

Our proprietary fixture data reflects  the rebound. VLCC liftings from Brazil to China have increased steadily this year – from just five in January to 14 in March – with this elevated activity  sustained through April and May. This follows a downward trending VLCC cargo count throughout most of 2024, on the back of Chinese refiners buying more sanctioned Iranian oil and using dark fleet vessels to transport these barrels, diverting demand away from mainstream markets.

Several market forces are contributing to the recent upward trend. One key driver is the tightening of US sanctions targeting the dark fleet tankers linked to Iranian and Russian trades, as well as “teapot” refineries that have traditionally imported discounted sanctioned crude. With these low-cost barrels no longer accessible without the risk of facing a penalty, some refineries have turned to alternative mainstream sources. Brazil is a natural candidate.

Adding to the momentum, China’s 10% retaliatory tariffs on US crude imports continue to make American barrels uneconomical for Chinese buyers.

In March, Saudi Arabia raised its official selling prices to Asia, further straining the budgets of price-sensitive refiners and encouraging a shift to more affordable Atlantic Basin grades. Brazil’s growing export availability met that demand at the right time.

While a round voyage from the Middle East to China typically takes around 60 days, the Brazil to China roundtrip could take 100 days and more. This longer sailing duration locks in vessels for extended periods, tightening available tonnage and lending support to VLCC freight rates. As more ships are committed to the Brazil to China route, the knock-on effect benefits the wider VLCC market.

Looking ahead, the outlook remains positive for VLCCs. While OPEC+ may gradually ease production cuts and Asian buyers could resume more purchases from the Middle East, so far as we enter June, our fixture data already shows that at least 14 cargos are scheduled to be loaded from Brazil to China in June if they discharge as reported. If Brazil continues expanding its crude production, we expect the Brazil to China VLCC flow to remain strong, providing continued support and demand for VLCCs in the months to come.

Data Source: Tankers International VLCC Database

Read our Data Spotlight on historical VLCC liftings in Brazil HERE.

In a nutshell, what is your role at Tankers International?

I sit on the chartering desk at Tankers International (TI) along with a dedicated team of 4 charterers; 2 in London and 2 in the US. I am responsible for negotiating and facilitating fixtures for the VLCCs within the pool, the size of which means working with a large range of customers and, therefore, a large and diverse cargo portfolio.

It is the combination of our team’s collective hard work and our global presence that achieves better scheduling of the fleet and ultimately a higher laden versus ballast ratio for all the vessels. I also ensure that the voyages are profitable, are in line with our forecast for the market going forward, and that they adhere to international regulatory compliance standards.

How did you get here?

Shipping has always been part of the family, with my father working in the clean tanker segment for 45 years. This close connection to shipping inspired me to study Maritime Business at Southampton Solent University. Straight after getting my degree, I got a job at Poten & Partners, beginning in the operations department before working my way onto the VLCC spot desk. I really enjoyed putting the theory I learnt at university into practice. The dynamism and high stakes of the VLCC market are an added bonus.

Knowing that I wanted to remain in, and pursue the VLCC sector, I was very keen to work at TI, given that it is the world’s largest VLCC pool. It truly is a global role – from waking up with messages from brokers in Singapore, to working on quotes for cargos for Asian clients, and closing the day with the Americans. It is an industry where no one day is the same and that’s what makes it such an exciting and enjoyable one to be part of.

Diving deeper into your role, how does data support you and therefore, the commerciality of the pool?

Data gives us critical insights into the market and the current rates.

Having a database with 100,000 historical VLCC fixtures, each with 40+ data points also means that, as a chartering desk, we’re completely in tune with the market. Being informed about market fixtures gives us a solid starting point for our own deals, allowing for smoother negotiations.

Additionally, this knowledge empowers us with accurate market value and prevents us from being lowballed. As the saying goes, knowledge is power!

The historical data that TI has collected on vessel performance is immensely helpful when setting up a fixture. We’re able to look at the previous performance of the vessel and anticipate any issues that it might run into. This enables us to be proactive in scheduling any repairs that may need doing instead of going in blind and being on the back foot.

For the industry to truly unlock the power of data, companies must invest in training staff to understand it. At TI we do just that but, as an industry, we mustn’t underestimate how important it is to deploy proper training for people to effectively collect, analyse, and apply data insights.

How has TI’s approach to fixing vessels changed over the past 2 years

We see fixtures as providing not only profit, but also valuable data points. TI has been collecting data since its inception in 2000. Integrating data into decision-making has always been at the core of the business. However, since I joined two years ago, TI’s organisation of its data use has been continuously improving.

In this time, as a commercial team and working with our data analyst Aaron Fu, we’ve introduced a bespoke forecasting model using proprietary data and an in-house dashboarding tool. This has been a game changer in providing us with data-backed insights when looking at ship availability and cargo demand.

I’ve seen a shift in priority when it comes to the use of data at TI. Whilst industry connections are, and always will be important, there’s now a greater emphasis on the chartering desk using data than there was previously.

That said, relationships remain critical in any business and particularly in this industry. We have great relationships with leading NOCs and oil majors who often come to us direct with the cargoes they want to fix and we want to be fair and reasonable. We negotiated in good faith a standard set of terms with many of our frequent customers, which has increased efficiency and productivity during pre/post fixing, as well as protecting the interest of our Pool partners

When you combine our relationships with our economies of scale, plus using data to provide market insight and inform decisions – this is a killer combination delivering profitable journeys for pool partners and reliability for charterers.

How does Tankers International stand out among its competitors?

Let’s be straight – in shipping, size matters. We have one of the largest independent VLCC fleet sizes globally of modern, sophisticated tonnage. As a result, we can unlock economies of scale through our volume negotiations, and administrative costs associated with running the fleet. Furthermore, a large fleet allows for improved scheduling and gives access to a greater diversity of cargoes which means better financial performance.

Secondly, your fleet is only as good as the people you hire and the chartering, operations, and senior team have the best interests of our stakeholders in mind. In my team especially, we emphasise trust and transparency in our dealings to ensure the price is right.

Finally, while the industry is still figuring out how best to collect and use data, at TI we have powerful data, in large volumes, and we sure know how to use it! Our competitive edge is our data combined with the talent in our organisation that interprets it effectively. We recognise that we can’t have either one or the other; we must use both human talent and data together to truly leverage powerful insights.

Jamie Ranger, Chartering Executive

What attracted you to Tankers International?

I’ve worked in the maritime sector for over 30 years, and I’ve experienced some dynamic moments during my time. I’ve been lucky to work for a range of different and unique companies from small shipowners focusing on Panamax vessels to large trading houses like Trafigura.

It was during my role at Trafigura that I started to specialise in demurrage – an indispensable and yet often overlooked element of shipping. When I left there, I was looking for a role that recognised the importance of demurrage and Tankers International was a great fit.

It was an exciting time to join Tankers International when I started in 2001 with lots of travel to introduce our team. Since then, we’ve had some impressive achievements, for example increasing the fleet to 70 plus vessels and outliving most other VLCC pools!

Overall, the team at Tankers International is positive about the claims and demurrage role and the present leadership team, led by CEO Charlie Grey is aware of the benefit of how my skills and expertise add to value to the pool, which is very motivating!

Can you shed more insight into demurrage claims in the tanker segment?

Demurrage is all about detail and requires a skilled eye regarding documentation – it’s much easier today as this documentation now comes via email as opposed to hard copies being sent off in the post. This means that certain elements of the claims processing have improved.

But challenges remain. There can be a lack of calculation standardisation between the Charterer and Owner, and we have to negotiate based on the information we have available which may not always be all the facts. As a result, it’s often the grey areas that require experience and a certain amount of trust to reach an agreement.

It is also important to note that charter parties rarely change, with some original contract wordings dating back to 1977 and due to this there are occasions when we find ourselves trying to interpret a term which may have had a different application when first drafted. Of course most Charterers use additional clauses to cover such discrepancies and other operational situations which may arise, but these are not always written in the clearest manner and therefore can also be problematic.

In my opinion having a dedicated person to handle this complexity is a must. Yet, in smaller companies, demurrage is often  job-shared, with less priority placed on this important role, which risks missed revenue opportunities. We’re also seeing broader trends where demurrage teams are changing frequently, including new locations, which adds more challenges to claims settlement.

How does your role support Tankers International?

The claims and demurrage role will continue to evolve and remain vital. Over the years it has cemented its place as an integral part of shipping across all types of commodities. Whilst  some commodities, such as coal, are less impacted by this source of income, the VLCC sector is more greatly affected.

Demurrage rates of VLCC fixtures can reach six figures, making this a valuable post-fixture revenue element.  Under our contracts there is usually an allowance of five days to load and discharge the cargo meaning that with variables such as no room for the cargo, or waiting in the queue outside ports, demurrage is very often incurred.

As the world’s largest VLCC pool, we have the privilege of working with different Owners and Charterers on new routes and welcoming new vessels into our fleet. This requires new contracts to be finalised. Part of my role entails structuring the required laytime charter party clauses that this calls for.

How does Tankers International stand out in its approach to demurrage claims? 

Tankers International is a progressive company and this is reflected in the way it handles demurrage. We have a bespoke system that works out the calculation for demurrage, but this is supplemented by the expertise of the Tankers International team, which balances the Owner and Charterers’ preferences.

We are  transparent with regards to how we report demurrage collection information back to the pool partners, with biannual reporting on demurrage. If requested, we can also add value to our pool partners by advising them on demurrage claims based on our detailed database.

At Tankers International, we pride ourselves on negotiating  with new counterparties and developing new relationships. Our business is always changing  globally, and due to our size, we understand the importance  of having a dedicated person handling demurrage.

What have been your personal highlights during your time at Tankers International?

I would have to say a recent panel discussion at the Oil Operations & Demurrage conference was a real highlight. I was part of a panel, sharing my views and knowledge on the topic of Ambiguous Clauses in Sales Contracts and Charter Parties.  Most of my work is behind the scenes and getting out there to discuss this vital role with fellow professionals was a great experience – I look forward to speaking more on the subject to generate more awareness of the importance and value it can deliver.

Toni Sharp, Claims and Demurrage Manager

As the new year begins, Mette Frederiksen, Head of Research & Insight at Tankers International, shares her perspective on the 2024 market, leveraging insights from the pool’s proprietary fixture data. She also explores how oil and freight dynamics have reshaped the VLCC market over the past year, with predictions for 2025.

Reflecting on 2024

At the start of 2024, the global shipping industry saw encouraging signs and was optimistic about the year ahead. Key forecasting agencies projected strong oil demand growth, driven primarily by China and other nations East of Suez. At the same time OPEC’s production cuts seemed set to be counterbalanced by non-OPEC suppliers expanding their output, particularly in the Atlantic Basin West of Suez.

The temporary removal of Venezuelan sanctions also reshaped the market going into 2024, integrating previously sanctioned trades into mainstream operations while geopolitical events in other parts of the world caused disruptions and delays.

All these factors pointed to increased tonnemiles and vessel demand – especially for trading routes running West to East. With vessel supply stagnant or in decline, the basic principles of supply and demand suggested an upward trajectory for freight prices. However, the reality of 2024 did not fully align with these high expectations.

Oil demand growth

Throughout 2024, revisions from forecasting agencies downgraded global oil demand growth by approximately 400,000 barrels per day (bpd). This adjustment closely mirrored downward revisions to China’s growth forecasts, which dropped by more than half a million barrels through the year

China’s oil demand remains a key driver of tanker markets and in 2024, the impact on the VLCC sector was twofold: slower-than-expected demand growth dampened overall market activity, and increased reliance on sanctioned oil further skewed dynamics.

Approximately 2.7 million bpd of China’s seaborne imports in 2024 originated from sanctioned countries, including substantial volumes of Iranian crude. We also saw Russian crude following to China, but much of this bypassed the VLCC market, instead utilising smaller tankers. Overall, shadow fleet activity into China diverted around 20 VLCC fixtures per month from the mainstream market.

Despite these challenges, there are signs of potential recovery. In November, Chinese refiners began sourcing more non-sanctioned crude from the Middle East and West Africa. This shift reflects both increasing U.S. sanctions pressure and rising costs associated with sanctioned oil.

As we now enter 2025, agencies forecast global oil demand growth of 1.1 to 1.4 million bpd, aligning with long-term averages. This suggests that, while 2024 was challenging, the broader demand outlook remains stable.

OPEC+ vs. Non-OPEC production dynamics

OPEC+ remains a key influence, with plans to reintroduce 2.2 million bpd of voluntary production cuts over an extended 18-month period starting in April 2025. The phased return of these barrels, primarily from Middle Eastern countries, could add demand equivalent to 55 VLCCs if directed to Eastern buyers.

While OPEC+ kept voluntary cuts in place through 2024, non-OPEC production growth, particularly from the Atlantic Basin, remained robust. However, realised growth fell short of initial expectations due to slower-than-anticipated growth from Brazil and lower-than-expected US exports. Furthermore, with China not drawing as many barrels from the Atlantic Basin, Atlantic exports remained largely within the West of Suez region, leading to shorter voyages and lower tonnemile demand. Looking ahead to 2025, projected non-OPEC production growth of 1.1 – 1.7 million bpd, with the majority expected from West of Suez producers, could drive significant West-to-East oil flows, benefiting VLCC demand.

Tonnemiles and fleet development

2024 saw fluctuations in vessel demand, including an unseasonal dip in September and October, followed by a recovery in November. Overall, spot market demand ended the year around 5% below 2023 levels.

The VLCC supply side continues to be fundamentally positive:

• The orderbook remains historically low at just 80 vessels (8% of the trading fleet)
• The fleet’s average age has reached 12 years, with over 100 vessels now 20 years or older
• Over the next four years, the number of vessels exceeding 20 years will double, representing 21% of the trading fleet.

With only 80 newbuilds in the pipeline, the effective fleet size is poised to decline as older vessels become less efficient. Add to this a large pool of older, exit-ready ships, the medium-term fundamentals are promising.

Looking forward into 2025

The market dynamics of 2024 resulted from a convergence of small events that collectively enforced downward pressure on freight rates. However, the fundamentals for 2025 suggest a more optimistic outlook:

• Non-OPEC supply is projected to have strong growth, and most of this is West of Suez
• OPEC+ production is set to gradually return to the market, potentially bolstering VLCC demand
• Geopolitical challenges remain a persistent factor, contributing to inefficiencies and supporting tonne-mile demand
• Fleet constraints could lead to an effective decline in vessel availability, exacerbating market tightness.

The main wildcard remains China. Both the growth of its oil demand and its sourcing patterns will be crucial in determining the trajectory of VLCC demand. If fundamentals align, 2025 could mark a significant turning point for the freight market.

Tankers International remains cautiously optimistic; we believe that 2025 holds the potential for a market recovery driven by robust fundamentals and a balanced fleet dynamic.

Stephen Robinson, a seasoned bunker industry leader, recently joined Tankers International in a pivotal role. In this insight we delve into his vision for the future of fuel procurement, the challenges posed by decarbonisation, and how Tankers International plans to stay ahead of the curve.

What made you join Tankers International? And how do you see your previous experience translating to this role?

It feels like a full-circle moment in my career. After over 30 years in the bunker industry, starting from bunker trading and working through a variety of senior roles, I’ve developed a broad range of experience – from building physical bunker supply operations to managing large-scale Government joint ventures. I’ve had a relationship with Tankers International for 20 years supplying their vessels in key strategic ports and the TI Pool has always stood out as a well-run, highly professional operation.

This opportunity felt like a natural progression for me. I’ve always respected TI’s work and the people involved, and it’s a chance to apply my knowledge and network to something exciting. Personally, having spent over 20 years in Dubai, I was thinking about returning to the UK, but knew it would have to be for the right opportunity. This role not only allows me to apply my solid technical background in terms of physical bunker supply and fuel procurement , but also to leverage long, established relationships with many physical suppliers and industry players, which I know will be an advantage for Tankers International and align with our plans to develop new initiatives going forward.

Given the rising complexity of fuel procurement and the shift toward alternative fuels, how do you plan to leverage your established relationships with physical suppliers to support TI’s fuel strategy?

While the shift toward alternative fuels is important, I believe we need to first focus on optimising our existing approach to traditional fuels. The strategy will be to aggregate demand across the pool and use that scale to secure pricing advantages from suppliers. With the significant tonnage we handle, particularly in key markets like Singapore where I have strong relationships, we can be more creative with forward pricing and risk management, exploring opportunities beyond just looking for marginal savings from physical suppliers.

We also want to leverage these established relationships to negotiate more strategic partnerships, offering more value to the pool than just price. For instance, we can work with larger suppliers in regions like Singapore, Fujairah, and Rotterdam, ensuring we’re ahead of the curve when it comes to transitioning into new fuel technologies. Many of these suppliers are already preparing for alternative fuels, and by engaging them early, we can set up test runs and make sure our infrastructure and relationships are in place for when those volumes grow.

While alternative fuels are still relatively small in terms of the overall tonnage, we’re closely monitoring the regulatory landscape and preparing accordingly. However, my immediate focus will be on optimising the 800,000 tonnes we currently manage every year, ensuring we have the best supply strategy in place to serve both our pool members and future expansion.

In your view, how can TI gain a competitive advantage in the increasingly complex fuel landscape? What key areas should the bunker desk focus on to achieve this?

Our main competitive advantage lies in our significant buying power. In the bunkering industry, this is crucial. We have strong, well-established relationships, large credit lines, and a reputation for reliability and trust. Our partners know they can trust us to pay on time and handle substantial volumes. This trust and financial strength sets us apart, especially in a market where stability and competence are vital.

To build on this, the bunker desk will focus on leveraging our scale to negotiate better pricing, while ensuring that we maintain strong, long-term partnerships with suppliers. Our aim is to not only offer cost savings but also reliability and strategic insight, which are highly valued in the industry.

As the fuel landscape becomes more complex with the rise of alternative fuels, it will be essential for us to stay ahead of the curve by building relationships with suppliers who are already preparing for this shift. This proactive approach will position us well to offer our pool members a seamless transition into future fuel technologies.

By combining our buying power with a focus on reliability, trust, and forward-looking strategies, TI can solidify its position as a leader in the bunkering sector, both now and in the future.

As TI aims to support pool members through the decarbonisation challenge, what specific strategies or innovations do you think will be most effective in managing this transition?

Managing the decarbonisation transition will require a multifaceted approach, as it is an industry-wide issue.

Firstly, our significant fuel short in the traditional fuels arena, will transfer into the new alternative fuels markets. Our professional reputation will translate well into this new developing market. Whilst our alternative fuel volume requirements will be relatively small initially, we need to educate ourselves in these new markets now, and have already started detailed discussions with leading industry players. We aim to provide guidance and resources to help pool members navigate regulations related to emissions, ensuring full compliance with international standards.

Secondly, as the fuel landscape shifts, we need to build strategic partnerships with the suppliers who are leading the way in alternative fuel technologies. Some of our vessels have already made successful test runs with Biofuels and we are up to date with all the new regulations that will be implemented over the coming months. This proactive approach will help ensure that TI maintains a competitive advantage, ready to offer our members access to emerging fuels such as biofuels, LNG, and other low-emission alternatives as they become more widely available. Collaborating on test runs and pilot projects with these suppliers will also provide valuable insights into fuel performance and supply chain logistics.

Finally, transparency and education will be essential in supporting our pool members through this transition. By sharing knowledge on regulatory changes, fuel performance, and supply chain innovations, we can ensure that our members are well-prepared to meet both their operational needs and decarbonisation targets.

By combining our financial strength, strategic partnerships, and a forward-thinking approach, TI is well-positioned to lead the way in helping our pool members navigate the decarbonisation challenge effectively.

How do you see the future of fuel procurement evolving with the introduction of new ship technologies and stricter environmental regulations?

The future of fuel procurement is undoubtedly heading towards increased automation and digitalisation, though the shipping industry tends to adopt these changes at a slower pace, compared to other industries. There’s growing interest in online platforms that simplify fuel purchasing processes, but we’re still in the early stages of seeing a seamless, fully integrated system emerge.

At Tankers International, I’ve already noticed a significant shift towards automation, particularly in data management. While platforms for fuel procurement and blockchain-based fuel tracking are starting to appear, like the recent announcement of electronic BDNs in Singapore,  the reality is that bunkering, especially with biofuels, remains a complex process. There’s a lot of blending involved, which introduces potential issues, so a human element will still be necessary for the foreseeable future.

As stricter environmental regulations and alternative fuels come into play, we’ll see more platforms emerging that help manage everything from fuel specs to historical performance data. However, we haven’t yet seen one perfect solution that covers all these aspects seamlessly. Until then, human expertise will remain critical in navigating these complexities. I believe that as these technologies grow and mature, there will be opportunities to integrate automation without losing the important personal relationships and trust that have always been key in the bunkering business.

Ultimately, the future will be a blend of digital tools and traditional human oversight, ensuring that both efficiency and reliability are maintained as we adapt to new regulations and fuel technologies.

What attracted you to Tankers International?

I’m a chartered accountant, and I qualified working in audit for Moore Stephens, with Tankers International being my first audit. Auditing Tankers International every quarter for nearly four years gave me a great sense of the company, and I was genuinely impressed with the entire team, from the senior leadership to operations.

After four years, it became clear that it stood out among the many companies I audited. I was particularly impressed with its IT, which, due to being both bespoke and well supported ensured data could be analysed in a variety of ways and reporting streamlined. This, combined with the tangibility of the VLCC market, its global presence and the pooling model all contributed to it being an interesting business to work for.

After one of my last audits, a member of the Tankers International team invited me for a coffee, and I was offered a role at the company. It wasn’t just a like-for-like role; the fleet was expanding at the time and they wanted me as a person and were prepared to build a role for me. I knew from my experiences interacting with the team during the audit that they treated their employees well and valued relationships.

How does your role support Tankers International?

The role is a real mix that keeps me on my toes. It involves financial reporting at month-end, annual reporting, and treasury management.

Working hand-in-hand with Pool Partners is a key element of my role. We use a mix of accounting software and bespoke reporting tools to ensure timely responses to their requests. In addition, a number of our Pool partners are listed companies which requires more stringent reporting and increased internal compliance which is where my background in audit allows me to add real value.

My role directly supports our Pool Partners’ ability to successfully navigate the decarbonisation of shipping. In 2020, for example, the IMO sulphur cap came into force, directly impacting the Pool from a financial reporting perspective. Due to new fuels, technologies and diverging partner strategies for navigating these regulations we had to adapt the way we pooled vessels to accommodate scrubber fitted vessels. We make absolutely sure that the ramifications of any operational changes are looked after from a financial reporting perspective.

What is coming ahead for the pool?

How our Pool partners choose to reduce their carbon footprint and adapt to global regulations ensures that there are always new and interesting challenges for the Pool. As a chartered accountant, I add most value to my role when interpreting how these may impact our business and how I can work collaboratively with our stakeholders to ensure we continue to produce meaningful and timely reports on the financial data they need.

Take EU ETS for example; we are required to buy EU Allowances (EUAs), which are a type of carbon allowance that allows companies covered by the EU ETS to emit a certain amount of CO2e, on behalf of Pool Partners.

With EU ETS and the EUAs, it’s essential that we take a joined-up approach, both within our organisation and in collaboration with Pool Partners. We need to cooperate closely to understand how partners want to manage their EUA exposure and their holding of EUAs. All of these must be backed up by robust reporting and processes that are transparent for both participants and auditors.

What have been your personal highlights during your time at Tankers International?

A stand-out moment for me during my time at Tankers International has to be adapting to auditing during the COVID-19 pandemic. Prior to the pandemic, we worked in the office five days a week, and the filing system was paper-based. This meant documents were printed out, stamped up for approval, and filed accordingly.

The pandemic then hit, and we had to adapt our processes almost overnight to ensure that all documentation was filed digitally. It was a testament to Tankers International’s culture that there was immediate buy-in to make this happen quickly, plus the talent to make it a reality.

When it came to our first audit with these new processes, the audit went smoothly, with all documents found and shared on time, and no challenges from the auditors. These processes continue to this day, and have been robust throughout every audit, and have allowed us to adapt to a more flexible working environment.

Owen Symmonds, Group Financial Controller